Monday Market Watch

   Market Recacp

 

The main story this week was the important monthly Employment report, which showed that wage inflation remains low. The European Central Bank (ECB) made no change in policy and had little impact on US markets. After a quiet four days, Friday's Employment data caused mortgage rates to improve and end the week a little lower.

Against a consensus forecast of 235K, the economy added 214K jobs in October. Revisions to prior months added 31K jobs. The economy has added an average of about 220K jobs per month so far this year, which is the fastest pace in over ten years. The Unemployment Rate declined to 5.8%, the lowest level since July 2008. Average Hourly Earnings, an indication of wage increases, were just 2.0% higher than one year ago. Bottom line, the job gains were roughly in line with expectations, but the low level of wage inflation was favorable for mortgage rates.

The results of this week's elections were largely as expected with the Republicans gaining control of the Senate and adding to their majority in the House. There was little immediate market reaction. So, will a Congress lead by the GOP mean that changes are coming for the mortgage market? The general belief is that there will be no significant changes any time soon, and probably not before the next Presidential election. The continuing conservatorship of Fannie Mae and Freddie Mac is the biggest industry issue Congress needs to address, but the complexity of any substantive reform and the significance of Fannie and Freddie to the housing market make this a very difficult issue.

Next week will be a light one for economic events. The JOLTS report, measuring job openings and labor turnover rates, will come out on Thursday. Retail Sales, which account for roughly 70% of economic activity, will be released on Friday. There will be Treasury auctions on Monday, Wednesday, and Thursday. Mortgage markets will 
be closed on Tuesday in observance of Veterans Day.






Call us Today to get started on your New Home Search!!

www.TorresReatlyGroup.com

Copyright @ 2014 MBSQuoteline

Eternal question: Should I buy or rent?

NEW YORK (CNNMoney) -- It's the eternal question in real estate: Should I buy or rent?
The answer has never been clearer: Buy!

In 98 of the top 100 housing markets, buying a home is more affordable than renting, according to the online real estate company Trulia. Only Honolulu and San Francisco buck the trend.
There are several reasons. Home prices are falling. Mortgage interest rates are at historically low levels. And rents are on the rise.

Of course, many renters are not in a position to buy. For one, it's hard to get a mortgage these days, despite low rates. And paying rent can push them further away from being able to afford to buy.
"Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face," Jed Kolko, Trulia's chief economist.
The nation's cheapest buyer's market is Detroit, where purchasing is only 3.7 times more expensive than renting.
Other top five metro areas where buying is much better than renting are Oklahoma City, Dayton, Ohio,Warren, Mich. and Toledo, Ohio.

The one number to watch for a housing recovery

Rankings like these, however, can obscure the factors that go into each decision.
Housing markets, even within a single metro area, typically have local submarkets. Take New York City, for example. Renting in Manhattan is more affordable than buying. But in suburban Westchester County just miles to the north, buying is the more affordable option.
The size of the home can also make a difference. In some markets, renting can be a better deal on larger homes, according to Trulia.

Readers on mortgage settlement: This stinks

In San Francisco, for example, studio and one-bedroom apartments sell for 13.1 times rent, while three bedrooms or larger sell for more than 18 times rent.
The Trulia survey does not take into account home price trends, which are another factor for individuals choosing whether to buy or rent.
"People will pay more for a home if they expect prices to rise and give them a better return on their investment," said Kolko.

0:00 / 1:27 No presidential fix for housing crisis

Those calculations are about to change, according to Ken H. Johnson, a professor of real estate at Florida International who has studied the buy-vs-rent question extensively. He believes home prices nationally have bottomed.
"The ship has turned," he said. "Markets should slowly start to recover. Housing will return to its traditional role of a safety investment."
If so, that adds an incentive to buy. And investing in many of the most expensive markets may be even safer.

Foreclosures: A rising tide ahead

Kolko pointed out that places like Honolulu, San Francisco and Boston have strong long-term growth prospects. They also have little physical space to grow, a factor that tends to keep prices strong.
On the other hand, old areas that aren't growing much -- while cheap -- may not return much in the long run.
"Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future," he said.

Find homes for sale

By Les Christie@CNNMoney

First Published: March 21, 2012: 8:05 AM ET